While supply and demand clearly play a role in establishing the value of a waterfront property, several unique elements overshadow the typical supply divided by demand equation.
The first one is rarity. Examples of this include:
- point properties—waterfront at the tip of one of our few natural points—with more expansive water frontage and street privacy
- parcels with extended front footage—homes that have far more waterfront feet than the norm (i.e. 180 front feet versus a more typical 60-80 feet)
- iconic properties—homes that have significant owners or histories
As with all real estate, location is a critical factor in assessing waterfront value. Any given property will have a value adjustment based on where it sits on the map and how the surrounding properties influence it. You can’t establish value without first determining the range of values for that location. When there are few comparable recent sales in a given location we often separate land value from the house value, compare them separately to other sold properties and then determine their combined value.
Waterfront access and amenities, which affect how you can use the waterfront, are an important consideration. This includes topography, dock, water depth and exclusivity. Higher value is generally given to:
- no or low bank waterfront with walk out access
- expansive views unhindered by natural obstacles or man-made structures
- large dock structures in good condition and/or boat houses that can no longer be built
- locations with higher water quality and/or deep-water moorage/access
A waterfront home’s setting also plays an essential role in its value. Homes most in demand include those with:
- an estate-like feel and additional privacy
- comfortable road access and parking
- sunny exposure
- larger (useable) lot square footage
- preferential positioning of the home and windows to capture views from most rooms
- remodel/rebuild-slated homes that have good construction access
Last, but not least, is the structure itself. While many waterfront buyers chose to make substantial changes to put their signature on their home, many still prefer turnkey homes with desirable floor plans and amenities. Because desired amenities change over time and the typical owner/buyer can usually afford to create what they want, waterfront homes tend to see the wrecking ball far earlier than non-waterfront properties.
In summing it all up, waterfront value is affected by many different criteria with supply and demand often determining how quickly a home will transact. The fewer potential buyers for a given price point, the longer the market time will typically be. That said, many waterfront buyers spend years waiting for the right combination of personally-desired features and amenities to come to market—making the demand less predictable than in other real estate arenas. This explains why you might see an expensive, rare waterfront property transact very quickly while similar homes sit on the market for years. Another old saying might sum up waterfront value best, “Beauty (and value) is in the eye of the beholder.”
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© Copyright 2020. Information and statistics derived from Northwest Multiple Listing Service.